Texas Instruments Q2 Earnings Review

Texas Instruments reported results on Tuesday 22^nd after the market closed. In this review, I’ll go through the company’s financial, break them down by segment, management’s commentary, and outlook. At the end, I’ll share my take on the quarter and what I’m doing portfolio-wise.

TI generated revenues of 3.82 billion dollars, representing a decline of 15.6% on a yearly basis. Nonetheless, revenue grew 4.4% sequentially and management’s guidance suggests continued sequential growth. This implies the company’s sales may be bottoming out as the industry works its way through the cycle.

During the quarter, Texas Instruments had gross profit of 2.21 billion dollars, down from last year’s 2.9bn, with a 57.8% margin, which declined 430bps YoY but increased 60bps QoQ. Operating income was 1.24bn, implying a margin of 32.6%, down 900bps yearly and 250bps sequentially. Lastly, TI generated 1.12bn in profit, with the net profit margin being at 29.5%, the lowest level in the past couple of years.

Texas Instruments brought in 1.57 billion dollars in cash from operating activities, up 12% yearly, mostly due to the swing in inventories and an increase in depreciation. As of last year, the company was still fully focused on building up their inventory level. Capital expenditures were 1.06bn during the quarter, in line with management’s guidance of 5bn per year.